Oil Markets Not Impressed By Small Crude Draw

Oil rig

July 3, 2019//-A day after the American Petroleum Institute’s estimated a 5-million-barrel crude oil inventory draw and failed to reverse oil prices’ fall, the Energy Information Administration failed at that, too by reporting only a moderate draw.

The authority reported a draw of 1.1 million barrels for the week to June 28, after a draw of 12.8 million barrels for the previous week—an inventory change of such magnitude it strengthened prices for the rest of the week.

At 468.5 million barrels, U.S. crude oil inventories were 5 percent above the upper limit of the five-year average, the EIA also said, adding refineries processed 17.3 million bpd last week, unchanged from the previous week’s daily processing rate.

Gasoline inventories shed 1.6 million barrels last week, with production averaging 9.9 million bpd. This compared with an inventory draw of 1 million barrels the week before and average daily production 10.5 million bpd.

In distillate fuels, the EIA reported an inventory build of 1.4 million barrels for the last week of June, with production standing at 5.3 million bpd. A week earlier, distillate fuel inventories fell by 2.4 million barrels and production was the same at 5.3 million bpd.

Last week, the EIA said U.S. crude oil production had surged to 12.16 million bpd during May, a record-high cementing the country’s place as the world’s top crude oil producers. While in line with the Trump administration’s energy dominance strategy and in favor of drivers, the news is not particularly good for the companies that made this level of production possible.

One thing is certain, however: rising U.S. production will continue to keep a lid on international oil prices as last evidence by traders’ indifference to OPEC+’s announcement of a nine-month extension of their production cuts.

By Irina Slav or OIlprice.com

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